Fuel Management

Fuel is the second biggest expense for fleets but do fuel cards actually work and save a business money? We look at the options available.

Here at commercialvehicle.com we are always keen to help fleet managers keep control of their fuel costs and they can do so by playing their ‘cards’ right!

That’s because fuel cards enable a firm to keep a close eye on what their fleet fuel costs are by tracking and controlling fuel usage.

A fuel card enables drivers to fill up their company vans and cars without having to pay for the fuel and claim the money back. This means the employer will pay the bill and receive information about fuel usage as well as who filled up, when and which vehicle.

Fuel cards are a powerful weapon for a business

This makes them a powerful weapon when looking to control costs because they can monitor those drivers who may be fuelling more frequently than other drivers or adding too much fuel to their vehicle.

In addition, some of these fuel card schemes allow the company to be charged at a lower rate than the price found at the pumps which, in many cases, could add up to a substantial saving over the year.

Nearly half of all fleets in the UK now use fuel cards especially since they help focus attention on a driver’s fuel efficiency and their performance.

Save money with a fuel card

It’s this sort of driving behaviour that will be flagged up and allow the company to introduce driver training to improve fuel economy, for instance.  It’s amazing how a few techniques for ‘greener’ driving really can save £££s and the same training will also make the employee a better driver.

Some firms also publish a league of their drivers who manage to get the most miles per gallon from their vehicle and the account will also highlight those drivers who fill up on a Friday night and again on a Monday morning which may possibly mean they are using the card for private mileage.

Another indicator that an employee may be misusing a fuel card is when a card is charged twice in one day without any major mileage being racked up which would suggest that the card is being used to fuel another vehicle.

Businesses can control costs and boost fuel economy

It’s this ability to help drive down costs and improve fuel economy which is helping to build competition in the fuel card market.

There are a range of options, the longest established is Allstar and its card is accepted at 90% of filling stations to make it the largest filling network of any card but then Barclaycard helped to change the landscape by launching Fuel+ after teaming up with The Miles Consultancy (TMC).

The big advantage for Fuel+ is that it is accepted at any filling station that will take Visa cards, that’s around 8,000 outlets in the UK alone and the card can also be used abroad.

The benefit in using the card is that it uses data drawn from TMC to help show the company that they can save money by reducing mileage. Of the companies that put the system under trial before its launch, most saw savings of up to 25% on their fuel costs.

More importantly, all of those who trialled the system went on to sign up as users.

Firms can save 25% with a fuel card

Another big player in the market is fuelGenie whose card can be used on Tesco and Morrisons fuel forecourts. This card can be used in 1,000 locations and allows the user to build-up loyalty points with the relevant supermarket.

In addition, there are also no account fees, card charges or surcharges.

All the employee does is use the card to pay for their fuel and the business will receive an invoice once a month showing all of the fuel buying transactions made on the fuelGenie account.

Save money and shop around for fuel

It’s not just by using a fuel card that a firm can save cash, they should also shop around for the cheapest fuel available.

This could be one of the biggest – and easiest – ways of saving money but 40% of UK small businesses don’t bother when it comes to buying fuel.

It means that firms, both large and small, might be spending several hundred pounds each year per vehicle.

That was the finding from Trackcompare.co.uk which also revealed that only one in five firms regularly use cheaper supermarket forecourts to fill up their vehicles.

Their research also showed that the majority of small firms had no overall strategy in finding the best and cheapest fuel options.

Get a fuel buying strategy in place and save cash

To underline how much money can be saved over the course of year, the firm says that by switching to fuelGenie, a business could save around 3p per litre every time they fill the vehicle up using the card.

Claire Alderson, marketing manager at fuelGenie, said: “Businesses are potentially pouring money down the drain by not shopping around and though some businesses use fuel cards to save costs, it’s surprising that only a fifth fill up regularly at supermarket forecourts.”

Other players in the market include a fuel card launched by Portland which is an oil trading company and allows the firm to fix the price of fuel for up to a year beforehand.

This may be a good idea for many large fleets but by fixing a fuel price ahead of its use means that the fleet risks losing money when the price drops. Though if fuel prices rise then the company is benefiting.

Get a fuel card that pays charities

There’s also a charity fuel card which will allow a company to make a donation to charity with every litre of fuel bought. It has been launched by the Professional Charity Services (PCS) outfit in conjunction with Shell.

The card has a £5 annual fee but between 1.74ppl and 3ppl will be paid as a rebate to the firm’s nominated charity while PCS receives 10%.

PCS have ambitious plans for the card and say they could have more than one million in circulation within three years.

Paul Wright, an ex-soldier who founded PCS, said: “Our hope is that corporates will select a charity and utilise the fuel card to support them and save money themselves on fuel.”

What to consider for a fuel card

There are other alternatives on offer and firms should think very carefully before switching from their current provider or even before taking up a fuel card to begin with.

Some big names have entered the fray, including Kwik-Fit, the RAC and Shell who have all brought out competitive fuel card offers.

It would be wise for the firm to trial a variety of fuel cards, and some offer a free trial to show how good their offer is.

It should also be noted, that when a fuel card provider realises a trial with another supplier is being arranged then their own offer will be, inevitably, improved.

Consider petrol prices on the pumps

Another important consideration is to appreciate that petrol pump prices vary around the UK so a major fleet may not feel the benefit of introducing a fuel card because the cost savings will be larger in the South because the fuel is generally dearer.

Conversely, because fuel is cheaper in the North many fleet operators may struggle to appreciate the cost savings because of the costs in running the card to begin with.

From experience, many fleet managers would also flag up the issue of carefully checking the terms and conditions of their fuel card provider because many will make a customer liable for any purchases made on the card for up to two days after it’s been stolen or reported lost.

How to choose a fuel card?

The choice of fuel cards is bewildering and even the big fuel firms offer them from BP to Shell who also have the attraction of, what they term as, an ‘innovative online fuel card management tool’.

This software is geared up to helping a fleet save fuel and will help create reports, online invoicing and create alerts on how the fuel cards are being used.

In addition, the Shell card can be used to pay for road tolls as well as ferry crossings and will provide breakdown assistance in Europe.

Shell has conducted research into the fuel management being undertaken in more than 200 road haulage operators in the UK with its ‘FuelSave Partner’.

This is an on-board fuel management system which will allow a fleet manager to remotely monitor a driver’s performance and fuel consumption and will link all fuel card transactions to the driver and vehicle.

Shell’s head of commercial fleet, Phil Williams, said: “Fuel contributes significantly to fleet operating costs so fuel management is an important job for managers.

“Environmental credentials are also increasingly featuring in customer tenders but road haulage managers say there is little information on the topic and they need help.”

The firm’s FuelSave equipment is free, though there is an installation fee which will analyse the fuelling, driver and vehicle data and provide the information in an easy to understand format.

The idea is that fraudulent activities will be picked up more easily and the system will reconcile the fuel purchase data with the actual fuel that is in the vehicle’s tank.

The RAC’s fuel card

The Fuel Card from the RAC is aimed at small and medium-size businesses and should save money by making their operations more efficient.

However, use of the card is restricted to around 1,000 filling stations which the firm says helps control costs and improves time management and they also offer the vehicle management service to help bring more control over the firm’s vehicles.

A spokesman said: “Not only is there a saving on administration costs and time managing for this business expense but by controlling where drivers can fill up, a business can help keep petrol and diesel costs down.”

And that, at the end of the day, is what having a fuel card is all about – they offer everything from cheaper fuel, to precise reports, to the effective operation of a firm’s vehicle fleet and with such a wide range on offer it’s no easy choice for a business. Perhaps the easiest plan is to trial several and decide which has the most impressive offering based on costs and ease of use.